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DAIRYLEA COOP. v. BUTZ

November 15, 1973

DAIRYLEA COOPERATIVE, INC., Plaintiff,
v.
Earl L. BUTZ, Secretary of the Department of Agriculture of the United States, Defendant


Robert L. Carter, District Judge.


The opinion of the court was delivered by: CARTER

ROBERT L. CARTER, District Judge.

I

 Dairylea is a cooperative of dairy producers which serves as a handler for some of the milk produced by its members. It is suing as a representative of its producer-members to challenge the base-excess provisions of an order regulating the handling of milk in the Middle Atlantic Region. In its capacity as a handler, Dairylea is required by the order to pay certain amounts into a pool for the milk which is received from producers; in their capacity as producers, Dairylea members are entitled to receive certain amounts for milk which they sell in the Order 4 Region.

 This action was brought to challenge the formula by which the amounts of payments to producers are determined; it raises no issue as to the price which handlers are required to pay into the settlement fund. Section 15A of the Agricultural Marketing Agreement Act of 1937, as amended ("the Act"), 7 U.S.C. §§ 601 et seq., 608c(15) (A), provides an administrative remedy for handlers who are aggrieved by provisions of a marketing order. Despite prior rulings which indicate that the administrative remedy is not available to those who seek to adjudicate producer rights, the agency has indicated in this case its willingness to waive any defense to a Dairylea 15A proceeding on the ground of lack of standing. There is, however, no case law to support the proposition that the Department has jurisdiction, pursuant to Section 15(A), to hear a complaint which rests upon an allegedly unlawful diminishment of payments to producers. In Inter-State Milk Producers' Cooperative, Inc. v. St. Clair, 314 F. Supp. 108 (D. Md. 1970) the court noted, at page 111, that:

 
"Whether a district court would have jurisdiction [prior to administrative review] to decide such a question at the suit of one or more producers, and the nature of the relief which might be granted would depend upon whether the ruling in question would diminish the equalization pool. * * * In the instant case the ruling increases rather than diminishes the equalization pool. * * *" [Citations omitted.]

 Plaintiff here complains of provisions which reduce payments to certain producers, but do not affect prices paid by handlers. The case is, therefore, analogous to the hypothetical proposed by the Maryland court and district court review should be available without a prior administrative determination.

 It, therefore, appears that the court has jurisdiction regardless of plaintiff's failure to seek an administrative remedy, regardless of the agency's agreement to provide an administrative forum (despite a lack of legislative authority to do so), and despite the possibility that Dairylea acted as a handler in some of the transactions at issue here.

 There are, furthermore, practical considerations which seem to make determination at this stage desirable. It is clear that Dairylea members proceeding individually could seek an adjudication of the issue at the district court level. Their intervention in this case was precluded only by venue problems (see Tr. p. 83). It is, therefore, reasonable to assume that a finding of no jurisdiction here will lead not to an administrative review (which, in view of the complexities of milk price regulation, might be helpful) but to judicial review in another district. A refusal to adjudicate the issue here would then serve to further delay resolution of the issue without providing the counterbalancing benefit of an expert tribunal.

 II

 
"The power of the District Court in reviewing the decision of the Secretary, following his adjudicatory hearing, is not a de novo fact finding process. It is limited to a determination whether the rulings of the Secretary are in accordance with law and his findings are supported by substantial evidence. If they are, they may not be disturbed. Because there attaches to the determination of an administrative agency a presumption of the existence of facts justifying the determination, the burden of proof falls on the party challenging the validity of the agency's ruling." Lewes Dairy, Inc. v. Freeman, 401 F.2d 308, 315-316 (3rd Cir. 1968), cert. denied, 394 U.S. 929, 89 S. Ct. 1187, 22 L. Ed. 2d 455 (1969).

 This rule is equally applicable in reviewing an agency promulgation following a rule-making hearing.

 7 U.S.C. § 608c(5) (B) (ii) (d) allows the Secretary to adjust prices paid to producers:

 
". . . to encourage seasonal adjustments in the production of milk through equitable apportionment of the total value of the milk purchased by any handler, or by all handlers, among producers on the basis of their marketings of milk during a representative period of time, which need not be limited to one year."

 This adjustment is made in Order 4 by allocating to each producer a base equal to his Order 4 marketings between August and December and giving it reduced payments for any deliveries made during the following flush season which exceed the base amount. Producers who enter the market during the flush season are not assigned reduced rates for all of the milk which they sell in Order 4, but are given a fixed base which varies from 50% to 70%, depending upon the time of entry into the market. Established Order 4 producers have the ...


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